Thursday, September 24, 2009

There's been a lot of discussion lately about the real-time web and theproblems it poses for incumbent search companies and technologies. Fast-moving trends and the availability of up-to-the minute updates mean that purely historical answers are missing crucial information. Dealing with constantly growing information streams causes performance and scalability problems for existing systems and calls into question the mechanisms for compiling, vetting and presenting results to users.While these challenges may sound new, game-changing performance and scalability problems are also being faced in the more traditional realm of data analytics and large-scale data management. Driven by network-centric businesses that track user behavior to a fine degree, there has been an explosion in the speed and amount of information that companies need to make sense of, and an increasing pressure on them to do so faster than ever before. What needs to be recognized is that the inadequacies of existing systems in these two seemingly different environments stem from the same source — infrastructure built to handle static data simply doesn't scale to data that is continuously on the move.The information stream driving the data analytics challenge is orders of magnitude larger than the streams of tweets, blog posts, etc. that are driving interest in searching the real-time web. Most tweets, for example, are created manually by people at keyboards or touchscreens, 140 characters at a time. Multiply that by the millions of active users and the result is indeed an impressive amount of information. The data driving the data analytics tsunami, on the other hand, is automatically generated. Every page view, ad impression, ad click, video view, etc. done by every user on the web generates thousands of bytes of log information. Add in the data automatically generated by the underlying infrastructure (CDNs, servers, gateways, etc.) and you can quickly find yourself dealing with petabytes of data.Batch processingThe commonality between real-time web search and big data analytics problems is rooted in the need to continuously and efficiently process huge streams of data. It turns out that traditional data analytics systems (such as database systems and data warehouses) and search engines are a poor match for this type of processing. These systems are built using batch processing, which involves information being collected, processed and indexed, then made available for querying and analysis, often with a cycle time of a day or more. This is not unlike the way programming used to be done in the days of punch cards -– create a card deck, wait for your turn, and come back the next day to see if it worked.Batch processing, however, leads to two problems: First, and most obvious, is the time lag ("latency") inherent in such processing. Batch processing systems typically have high startup costs and overheads, so efficiency improves as you increase the batch size. Larger batch sizes also make it easier to exploit the resources of ever-larger clusters of servers. In a batch world, throughput is improved by delaying the processing of information — exactly the opposite of what's needed for real-time anything.The second problem with the batch approach is that it wastes resources. For example, data warehouses typically ingest data through an ETL (Extract, Transform, Load) process that writes data into disk-based tables. Subsequent queries then hunt for that recently stored data and pull it back into memory to process it. All of this data movement is hugely expensive in terms of I/O, memory and networking bandwidth.The batch approach stems from viewing information as something that is stored rather than something that flows. The real-time web is a perfect example of where this way of thinking fails; the much larger information stream generated by all web activities is a less visible but even more extreme case.A mindset shiftThe big data problem has fed a surge of activity in data analytics systems. The flurry of new data warehousing and database vendors and the increasing adoption of the Google-inspired Hadoop stack are driven by these new data management challenges. While there have been some innovations in terms of efficiency in these systems (such as highly compressed columnar storage and smart caching schemes), the basic approach has been to rely on increasing amounts of hardware to solve ever-bigger problems. Such systems have not addressed the fundamental mismatch between batch-oriented processing and the streaming nature of network data.The excitement around real-time web provides a great opportunity to reassess the way we think about information and how to make sense of it. While there will always be a need to store information and to search through historical data, many of the analysis and search tasks that users need to perform can be done in-stream. This type of processing has both efficiency and timeliness benefits. For example, real-time search and trend analysis of the tweetstream can be done continuously as tweets are being created.This doesn't mean that the need for managing stored data is going away. In fact, most useful applications will need to combine streaming data with stored historical data, and in-stream processing is an extremely efficient way to compute metrics to be stored for later use. The point is that all processing that can be done in-stream should be. And such processing should not be limited just to the emerging "real-time" web. Applications that can map activity on the real-time web with information about past and present user activity on the traditional web will be perhaps the most useful of all. For example, a spike in tweets about a particular band could be used as a predictor of demand at an online music store. Conversely, the real-time web could be monitored for explanations for an observed spike in user activity patterns, video popularity or music downloads.The key to enabling such applications is to move from the "data as history" mindset to one of "data as streams." Fortunately, the real-time web is providing a great opportunity for all of us to rethink our approach to making sense of the ever-increasing amount of information available, no matter where it comes from.Michael Franklin is the founder and CTO of Truviso, and a Professor of Computer Science at UC Berkeley.

Some of you may already know that I travel around the region pretty frequently, having to visit and conduct seminars at my offices in Malaysia , Indonesia , Thailand and Suzhou ( China ). I am in the airport almost every other week so I get to bump into many people who have attended my seminars or have read my books. Recently, someone came up to me on a plane to KL and looked rather shocked. He asked, 'How come a millionaire like you is traveling economy?' My reply was, 'That's why I am a millionaire. ' He still looked pretty confused. This again confirms that greatest lie ever told about wealth (which I wrote about in my latest book 'Secrets of Self-Made Millionaires'). Many people have been brainwashed to think that millionaires have to wear Gucci, Hugo Boss, Rolex, and sit on first class in air travel. This is why so many people never become rich because the moment that earn more money, they think that it is only natural that they spend more, putting them back to square one. The truth is that most self-made millionaires are frugal and only spend on what is necessary and of value. That is why they are able to accumulate and multiply their wealth so much faster. Over the last 7 years, I have saved about 80% of my income while today I save only about 60% (because I have my wife, mother in law, 2 maids, 2 kids, etc. to support). Still, it is way above most people who save 10% of their income (if they are lucky). I refuse to buy a first class ticket or to buy a $300 shirt because I think that it is a complete waste of money. However, I happily pay $1,300 to send my 2-year old daughter to Julia Gabriel for Speech and Drama c lasses without thinking twice. When I joined the YEO (Young Entrepreneur's Orgn)a few years back (YEO is an exclusive club open to those who are under 40 and make over $1m a year in their own business), I discovered that those who were self-made thought like me. Many of them with net worth well over $5m,travelled economy class and some even drove Toyotas and Nissans - not Audis, Mercs, BMWs. I noticed that it was only those who never had to work hard to build their own wealth (there were also a few ministers' and tycoons' sons in the club) who spent like there was no tomorrow. Somehow, when you did not have to build everything from scratch, you do not really value money. This is precisely the reason why a family's wealth (no matter how much) rarely lasts past the third generation. Thank God my rich dad foresaw this terrible possibility and refused to give me a cent to start my business. Then some people ask me, 'What is the point in making so much money if you don't enjoy it?' The thing is that I don't really find happiness in buying branded clothes, jewellery or sitting in first class. Even if buying something makes me happy it is only for a while; it does not last. Material happiness never lasts, it just gives you a quick fix. After a while you feel lousy again and have to buy the next thing which you think will make you happy. I always think that if you need material things to make you happy, then you live a pretty sad and unfulfilled life. Instead, what makes me happy is when I see my children laughing and playing and learning so fast. What makes me happy is when I see my companies and trainers reaching more and more people every year in so many more countries. What makes me really happy is when I read all the emails about how my books and seminars have touched and inspired someone's life. What makes me really happy is reading all your wonderful posts about how this blog is inspiring you. This happiness makes me feel really good for a long time, much much more than what a Rolex would do for me. I think the point I want to put across is that happiness must come from doing your life's work (be it teaching, building homes, designing,trading, winning tournaments etc.) and the money that comes is only a by-product. If you hate what you are doing and rely on the money you earn to make you happy by buying stuff, then I think that you are living a life of meaningless.

This transmission is intended solely for the person or organization to whom it is addressed and it may contain privileged and confidential information. If you are not the intended recipient you should not copy, distribute or take any action in reliance on it. If you believe you received this transmission in error, please notify the sender.

Tuesday, September 22, 2009

Earlier this month, Facebook announced that it has 300 million subscribers. The fantastic growth of the company is mirrored by the rapid advancement of Twitter and many other web services that have spawned ecosystems of their own. While these services get most of the media attention, a much bigger story is what lies beneath — the Internet's infrastructure and the grid that powers it."We have entered this new era where essentially everything is on all the time," Alan Meier, a senior scientist at Lawrence Berkeley National Laboratory, recently told The New York Times. And increasingly, everything is connected to the Internet. The biggest impact is being felt by the electricity grid. The power consumed by servers alone doubled between 2000 and 2005 to about 123 billion kilowatt-hours. Data center power use is likely to increase another 76 percent by 2010, according to Jonathan Koomey, a researcher at Lawrence Berkeley and Stanford University.I can't imagine the energy implications of what's coming next. There are 444.3 million broadband subscribers in the world, according to the Broadband Forum, and that number is only going to increase over the next few years as emerging telecom economies such as India, Brazil and Russia ramp up their Internet efforts. A whopping 250 million people are going to connect to the Internet wirelessly by the end of 2009. Just imagine the bandwidth and computing horsepower needed if all of them started streaming movies from Netflix, listening to music by visiting Spotify, and sharing videos and photos via Facebook.We are starting to see a spike in demand for everything from data centers to backhaul connections to content delivery networks. In the month of September alone, four new major data centers were announced that would cost upwards of $1.3 billion to add over 750,000 square feet of new data center space.

On Sept. 10, details emerged about Apple's plans to build a 500,000 square-foot data center in Maiden, N.C., that is going to cost over $1 billion spread over 10 years.

Equinix, a data center service provider, said it will build two data centers — a 152,000 square-foot facility in Washington, D.C., and a 170,000 square-foot facility in Silicon Valley — that will collectively cost about $245 million.

New York Internet plans to open a 40,000 square-foot facility in Bridgewater, N.J.

Codera is building a 22,000 square-foot data center in downtown Phoenix.

Just as demand for data center space is rising, we are seeing an increase in the desire for bandwidth. For instance, Cogent Communications, a large Internet service provider, reported that the traffic on its network grew 10 percent from the first to second quarter of 2009 (PDF). Qwest Communications recently announced plans to upgrade its long-haul network to 100Gbps. The company recently said that Internet traffic is doubling approximately every 19 months, and that each year, individual Internet users consume approximately 43 percent more bandwidth than the previous year. Mike Hatfield, CEO of Cyan Optics, recently told me that his company's clients are seeing demand for bandwidth double every 12-18 months. Add all these random tidbits, and you start to see a larger picture emerge.Network operators added 9.4 terabits per second of new capacity during the 12 months ending July 2009, bringing the global capacity to about 25Tbps, a recent report by Telegeography shows. That compares with 8.7Tbps of new capacity in the 12 months ending July 2008.Online video is going to help accelerate the infrastructure buildout. At present, we are watching only 3-4 hours of web video a month (vs. over 150 hours of old-fashioned TV), and this number is going to increase as more and more TV Everywhere-styled services go online. Some are predicting 3D-centric video content that would be made possible by gigabit speeds.What does this all mean? The demand for everything from routers and switches to servers is going to swing up, as will the urgent need for power and the problems that would come with that need.
Whichever way you look at it, there is a technology revival taking shape. Get ready for it.

Thursday, September 17, 2009

Purchase decisions are influenced differently in social networks than in the brick-and-mortar world, says Harvard Business School professor Sunil Gupta. The key: Marketers should tap into the networking aspect of sites such as Facebook. Key concepts include:

Some social network users are influenced by the purchases of their friends.

Of these users, 40 percent show a strong "keeping up with the Joneses" behavior, increasing sales by 5 percent.

"High-status" users are more likely to not purchase something that others have bought.

On social networks, viral campaigns may work better than advertising.

When marketers want to reach users of social networks such as Facebook, MySpace, or Cyworld, they have two choices: buy advertising or start a viral campaign.

New research by Harvard Business School professor Sunil Gupta suggests that viral may be the way to go in these connected worlds. But first it's important to understand both who influences purchase decisions in online communities and which groups of users can be influenced.

"Viral campaigns truly leverage the network aspect of these social networking sites."

"By understanding the social network of users, firms can better understand and influence consumers' behavior," says Gupta, who coauthored the working paper "Do Friends Influence Purchases in a Social Network?" [PDF] with Raghuram Iyengar, of the Wharton School, University of Pennsylvania, and Sangman Han, of Sung Kyun Kwan University in South Korea.

Gupta recently discussed the research with HBS Working Knowledge.

Sarah Jane Gilbert: Your research attempted to answer this question: Do friends within a social network influence online buying behaviors of others in the group? What did you discover?

Sunil Gupta: To answer this question we used data from Cyworld, an online social networking site in South Korea with almost 21 million members. Cyworld users buy virtual items to decorate their home pages. Our research shows that some users are influenced by the purchases of their friends while others are not.

Q: One of your findings was that certain types of group members are more influenced by social pressure than others. Can you discuss the distinctions among user groups and how they influence buying?

A: We found three distinct groups. Low-status members (48 percent of the users in our sample), who are not well connected to others, are generally unaffected by the purchases of other members. Middle-status members (40 percent of the users) are moderately connected and show a strong and positive effect due to friends' purchases. In other words, this group shows strong "keeping up with the Joneses" behavior.

Members of the high-status group (12 percent of the users) are well connected and are very active on the site. However, these users show a negative effect due to friends' purchases because they want to remain distinct. Instead of buying items like the other members, this group tends to pursue non-purchase-related activities (e.g., uploading their own content).

Q: Were you able to quantify social influence in terms of how it increased or decreased the percentage in sales revenue?

A: The impact of the low-status group on revenue is negligible. Social influence increases revenue from the middle-status group by 5 percent. In contrast, social influence leads to almost a 14 percent drop in revenue from the high-status group.

Q: Despite the ability to gather millions of users, the business viability of social networking sites seems uncertain. Is there any good news in your findings for the Facebooks and Twitters of the world?

A: Following the success of Google, social networking sites such as Facebook have been trying an advertising-based business model. However, studies show that the click-through rate of ads on social networking sites is extremely low—simply because people don't go to these sites to seek information about specific products. Therefore, the advertising-based business model has had only limited success on social networking sites.

If the purpose of advertising is to influence consumers' purchases, our research shows that there is another way to influence their behavior. Imagine that Sony wants to promote its new digital camera. Sony can either advertise on Facebook and accept a very low click-through rate, or give away free cameras to several Facebook members (potentially at a lower cost than advertising) and generate a viral campaign. Our research shows that this viral campaign is possible. We further show what type of users are more likely to be influenced by such a campaign.

Interestingly, Sheryl Sandberg [HBS MBA '95], the new COO of Facebook, recently talked about such a campaign. On Valentine's Day, Honda offered 750,000 Facebook members a heart-shaped virtual gift complete with the Honda logo that could then be passed on to other members. It is exactly this type of viral campaign that has the potential to be an enormous source of revenue. Unlike banner ads, these viral campaigns truly leverage the network aspect of these social networking sites.

Q: What are some key takeaways from your work for retail and other online sites in general hoping to influence online purchasing decisions?

A: The fact that people are influenced by their friends is not new. We all know it at some level or the other. However, by understanding the social network of users, firms can better understand and influence consumers' behavior.

Consider a cosmetic company such as Mary Kay. Its Web site currently allows consumers to upload their picture and try different cosmetics virtually to see how they may look before making a purchase. However, if users (especially young consumers) really value the opinion of their friends, Mary Kay may benefit from linking its online site to a social networking site such as Facebook where users may even get instant feedback from their friends before making a purchase.

Q: What are you working on now?

A: I am continuing my research to better understand how information and influence spreads in social networks. I am also working on understanding the relative role of offline and online advertising to determine how firms should optimally allocate their resources across different media

Cell phones, the Game Boy, and PCs are examples of products based upon software platforms—ecosystems where independent companies can provide products and services tied to the core technology. Playing in a software platform world can make you rich—ask ringtone creators—but it also demands special management skills that emphasize cooperation over competition. Professor Andrei Hagiu discusses his new book, Invisible Engines. Key concepts include:

Software platforms have improved productivity and innovation in many industries, disrupted or destroyed others, and created entirely new businesses.

Software platforms are powerful engines of change because of the malleability of code and of the fundamental functions they perform, which make it easy for them to march across industry boundaries; and because their multi-sided nature allows them to spawn vibrant ecosystems of complementors.

Managing software platforms is about much more than creating technology. It takes skills in navigating cooperation and competition, building creative business models, and anticipating competition across industries.

You can't see them, but we've all used "software platforms" over the last few decades, whether they are embedded in the Windows operating system, a cell phone, or game machine. In a new book, the authors term software platforms "invisible engines that have created, touched, or transformed nearly every major industry for the past quarter century."

Think of software platforms as ring leaders of ecosystems in which a few or many companies can participate to reach users. These core products, like Windows, for example, offer software services that can be used as the basis for independent developers to build new features. The cell phone has become a lucrative platform for more than handset makers—also in on the party are makers of digital cameras, music services, and organizer software.

Not only are existing industries being transformed and sometimes toppled by software platforms, but new industries are also springing up around them; witness the multibillion-dollar ringtone business.

To record the impact of software platforms on the economy and look to their future impact, David S. Evans, Andrei Hagiu, and Richard Schmalensee collaborated on Invisible Engines: How Software Platforms Drive Innovation and Transform Industries, available October 4 from MIT Press. Evans is Managing Director of the Global Competitive Policy Practice at LEGC LLC. Hagiu is a professor in the Strategy unit at Harvard Business School. Schmalensee is John C. Head III Dean and Professor of Management at MIT Sloan School of Management.

We asked Hagiu to discuss the book. To learn more about Hagiu's early-stage research into the concept of multi-sided markets, of which many software platforms are a manifestation, see this earlier HBS Working Knowledge interview.

Sean Silverthorne: At a 50,000-foot level, what impact have software platforms had on traditional industries over the last thirty years?

Andrei Hagiu: At its most fundamental level, they have fueled innovation and improved productivity. Software platforms have accelerated technological innovation by providing springboards that allow specialized producers to leverage their infrastructure and create new innovations and by bringing digital technology to a wide variety of sectors and users, again by providing flexible infrastructures that make it possible for armies of specialized providers to build myriad software solutions for myriad tasks that previously were performed in traditional, non-tech ways. In this way, they have improved the productivity of many traditional industries (just look at all the industries that use PCs today) and created brand new ones (just look at the Internet and mobile data services including streaming content).

Even the best product design will end up subordinated to the best multi-sided platform.

Software platforms have also been the source of much creative destruction. The reduction in transaction costs and increases in efficiency brought about by digital technologies powered by software platforms have been so great that the so-called "old guard" was displaced (or may be on its way to extinction): Typewriters have been all but displaced by PCs, board games have been displaced (but not eliminated entirely) by the videogame industry (PC- and console-based), and traditional newspapers are fighting an uphill battle for readership against Internet content portals.

Q: From a management skills perspective, what do managers and strategists who make their living from software platforms need? Seems like cooperation rather than competition would be a core competency?

A: Yes, cooperation is critical: The quintessential key to success of software platforms has always been their ability to build large, well-functioning ecosystems of third-party producers who build on top of the software platform. Without them, no one would have any need for the platforms. The relevant management skills are:

Knowing the community and being able to identify and attract the third-party producers who can build the most valuable innovations.

Knowing how to manage the ecosystem: Deciding the right balance between quantity and quality; knowing when to compete and when to collaborate with partners; being able to manage the conflicts of interest inherent to such compete-collaborate relationships; knowing how to monetize the value created by the ecosystem (which member of the ecosystem is needed most—developers or end users—and how the pricing scheme must be designed to get both sides on board).

Knowing how to architect the physical design and scope of the platforms: what to do in-house vs. what to rely on others to do; which features to offer and which to forego.

Knowing how to spot competitive threats early, both within the industry, but most important and difficult, in adjacent industries, where other platforms might be poised to strike (e.g., smart phones moving into the PDA industry); and conversely, spotting expansion opportunities in adjacent industries (e.g., NTT DoCoMo expanding into payment systems).

Q: The book makes mention that software platforms have the promise to significantly change how we buy and pay for goods and service in the future. Could you elaborate on this? What impact do software platforms have for the consumer on the street?

A: Software platforms are universal in nature because they can potentially underlie any digital technology: As digital technologies become more ubiquitous, so will software platforms. They can potentially reduce search and transaction costs for any imaginable economic transaction.

Today we can already search for, choose, and pay for many goods on the Internet using a few clicks by way of the software platforms running under eBay or Google or Rakuten. In some countries like Japan and Korea, one can do exactly the same thing on the Internet and over the mobile phone. And in Japan, mobile phones now function as payment devices (one can waive the phone in front of a reader to pay). The next generation videogame consoles are no longer just gaming platforms, they are gateways to a variety of digital content, including DVD movies and Internet video for the gamer and advertising and other promotional opportunities for the advertiser. Broadly speaking, software platforms have the potential to streamline access to many diverse transactions through a single device, be it a mobile phone, a videogame system, an iPod, a car navigation system, etc.

Q: Software platforms naturally lead to multi-sided business but Apple seems to be the outlier in all this ferment. What are the lessons of Apple's contrarian approach? Will this come back to bite them?

A: Let me first make a clarification. Apple's computer business is definitely multi-sided, just like Microsoft's, except Microsoft Windows has three sides (end-users, application developers, and hardware makers) whereas Mac OS has only two sides (end-users and application developers—Apple does the hardware). Apple's decision to stay two-sided rather than three-sided is in large part the reason for which Windows-based PCs have today a 95 percent-plus market share, whereas Macs are at less than 4 percent. So in this business I think everyone—including Apple—has learned the obvious lessons there were to learn: Whereas control over quality in the initial stages may have been a good reason to stay away from that third side, the latter is necessary in order to achieve sufficient scale in the market, particularly in the face of competition.

Losers will include anyone providing a brick-and-mortar product or service that can be digitized and put on a software platform.

If we turn to Apple's iPod/iTunes business, it superficially looks multi-sided, in the sense that Apple has "gotten on board" music publishers and consumers. But in fact, Apple has done so in a one-side-at-a-time way, by first licensing the music (essentially taking "possession" of the music licenses) before turning to consumers and selling it to them (at a price and under a format entirely controlled by Apple) along with iPods. This took the chicken-and-egg aspect (characteristic of multi-sided businesses) out of the equation, which again might have been the right thing to do to get started.

My personal view is that in the face of an explosion in the number of digital music services (download and/or subscription) rivaling iTunes and that of digital music players (rivaling iPod), Apple should turn to a truly "multi-sided" model, by opening up iTunes and devolving more control to music publishers in order to achieve more variety of the music offering—thus trying to become the eBay of digital music.

The broad lesson here is that ingenious product design can take you very far; however I am willing to take a bet that in any multi-sided market, sooner or later, even the best product design will end up subordinated to the best multi-sided platform in town.

Q: What is your best guess as to how software platforms will evolve over the next ten years? Who will be the winners and losers?

A: They will undoubtedly continue to cross industry boundaries and penetrate in a variety of markets previously untouched by digital technologies: For instance, software platforms are playing an increasingly prominent role in the car industry today. Does that mean that Toyota will become a Microsoft OEM anytime soon? Probably not, but they will certainly be an awful lot closer to each other!

The winners will be of course the providers of the most versatile and flexible software platforms, i.e., those that can span the widest range of functionalities and markets, and also those that will perform the most fundamental functions, which in my view are search and payments. Another category of winners will be of course the owners of valuable content—be it games, music or movies—software platforms will allow them to monetize and distribute their content in ways which were previously not possible. Needless to say, consumers will also gain a lot.

Losers: anyone providing a brick-and-mortar product or service that can be digitized and put on a software platform—unless the producer does it him- or herself. Example: newspapers.

From Invisible Engines: How Software Platforms Drive Innovation and Transform Industries by David S. Evans, Andrei Hagiu, and Richard Schmalensee.

Many modern products run on software platforms. Car engines and navigation systems have one, as do jumbo jets and the handheld devices we use for e-mailing and organizing ourselves. Video game consoles from Atari to Xbox are based on them. French debit cards have included them for years; these "smart cards" may eventually replace the magnetic stripe cards that are standard in the United States. Sophisticated mobile telephone services such as i-mode Japan are based on software platforms. Personal music devices are as well. And, of course, all sorts of business and home computers also have them.

Software platforms are based on computer code. The code tells the microprocessors and other hardware components what to do. It is what makes your computer do calculations, or your personal music device play songs. And it provides services to applications, such as accessing the hardware or providing features that many applications would otherwise have to include themselves. It is what makes handwriting recognition possible on personal digital devices and enables employers' human resources software to work on the company's computer system.

Yet these remarkable software engines are invisible to most of us. Their creators write them in a language that looks almost human. They then use other code to translate what they have written into machine language—combinations of 0s and 1s that microprocessors understand. Those digital data are then transferred to the physical memory or storage in the device itself.

Some software platforms are famous. Linux, the Mac OS, and Windows are household names. You cannot really see or touch these products, but at least you can buy a CD and a hefty manual. Others are known to many business users: z/OS, Solaris, and Unix, for instance. Many are known only to a few, such as Symbian for mobile phones or GeoWorks for handheld devices. Others, including the software platforms that are the real brains behind devices such as the Sony PlayStation or Tivo's digital video recorder, are truly anonymous.

Software platforms have generated great wealth. Windows has provided about 40 percent of Microsoft's revenues in the last decade.2 It has helped make Bill Gates the richest man in the world. Linus Torvalds has become a modern icon as a result of writing the first version of the famous open-source platform, Linux. And software platforms have been partners in some of the most successful technological marriages of the last quarter century: the Macintosh, iPod, PalmPilot, Sony PlayStation, and Xbox are among the better known hardware-software platform couples.

The computer revolution has been changing our lives now for fifty years, at an accelerating rate, and much has been written about it. Many of the companies, products, and entrepreneurs behind this revolution have become household names. Stories of Steve Jobs and Steve Wozniak building the first Apple computer in their garage and Bill Gates getting the best of IBM are almost folklore at this point. Economists have written a fair amount about the computer industry, and business writers have scoured its history in search of the drivers of great success.

Yet little has been written about software platforms. This is not necessarily remarkable. They are not well-defined products like toothpaste. The software platform used in i-mode does not compete directly with the software platform used in Web servers. And they are not components, like the engines sold to automobile companies or even the chips sold to computer device manufacturers. There is no software platform industry defined in government statistics. Rather, software platforms are a technology—though one based on a written language—that can be deployed in a vast range of industries for a great multitude of purposes.

Many economic threads, however, tie diverse software platforms together. The most critical of these ties is their potential for supporting a multisided business—one in which value is created by bringing together on the same platform multiple distinct groups of customers who need each other in some way. Businesses that cater to the singles scene are one example of this sort of business. Heterosexual nightclubs must get men and women together in the same place. Shopping malls are also multi-sided: Their developers create platforms that attract both merchants and consumers. Similarly, many software platforms provide services to application developers and platform users. Like shopping malls, they also provide a common meeting ground where one side can sell to the other side.

This transmission is intended solely for the person or organization to whom it is addressed and it may contain privileged and confidential information. If you are not the intended recipient you should not copy, distribute or take any action in reliance on it. If you believe you received this transmission in error, please notify the sender.

Many business leaders are mystified about how to reach potential customers on social networks such as Facebook. Professor Mikolaj Jan Piskorski provides a fresh look into the interpersonal dynamics of these sites and offers guidance for approaching these tantalizing markets. Key concepts include:

Online social networks are most useful when they address failures in the real world.

Pictures are the killer app of social networks.

Women and men use these sites differently.

Businesses shouldn't consider SNs as just another channel.

This transmission is intended solely for the person or organization to whom it is addressed and it may contain privileged and confidential information. If you are not the intended recipient you should not copy, distribute or take any action in reliance on it. If you believe you received this transmission in error, please notify the sender.

Corporate marketers by and large struggle with how to use social networking sites to reach potential customers, says Piskorski, who advises companies on this subject. The problem is that execs think of online social networks as social media and treat it as another channel to get people to click through to a site.

It doesn't work that way.

For one thing, findings show that people don't click through on advertising on social networks. "A good analogy is to imagine sitting at a table with friends when a stranger pulls up a chair, sits down, and tries to sell you something while you are talking to your friends. You will not get far with a strategy like this."

"To be successful, you need to shift your mindset from social media to social strategy," he continues. A good social strategy essentially uses the same principles that made online social networks attractive in the first place—by solving social failures in the offline world. Firms should begin to do the same and help people fulfill their social needs online.

To continue the earlier analogy, "You should come to the table and say, 'Here is a product that I have designed for you that is going to make you all better friends.' To execute on this, firms will need to start making changes to the products themselves to make them more social, and leverage group dynamics, using technologies such as Facebook Connect. But I don't see a lot of that yet. I see (businesses) saying, 'Let's talk to people on Twitter or let's have a Facebook page or let's advertise.' And these are good first steps but they are nowhere close to a social strategy."

Tuesday, September 15, 2009

At its most basic level the Wisdom of the Crowd (WOC) means that the aggregated thought and knowledge of millions of people can be smarter than trained individual experts. The concept of the Wisdom of the Crowd was documented and formalized by James Surowiecki in 2004 in his book titled "The Wisdom of Crowds."

The concept of WOC has become more widely utilized by many companies, with varying degrees of success, over the past few years. This concept, however, has been around forever – it's what democratic elections try to tap into. However the Internet takes it to an entirely different level due to the immense number and diversity of connections that it fosters between people.

In order for WOC to be truly successful there are four key qualities, as documented by James Surowiecki, which make a crowd smart versus an unruly mob. It needs to be diverse, so that people are bringing different pieces of information to the table. Itneeds to be decentralized, so that no one at the top is dictating the crowd's answer. It needs a way of summarizing people's opinions into one collective verdict. And the people in the crowd need to be independent, so that they pay attention mostly to their own information, and not worrying about what everyone around them thinks.

There are several examples of how WOC has been implemented successfully to drive value for both consumers and brands. Wikipedia, written and edited by tens of thousands of unpaid contributors, should be better than an encyclopedia written and edited by specialists. Wikipedia is one of the most highly trafficked sites on the Internet and now provides information and definitions to millions of people around the world.

Hollywood Stock Exchange (HSX.com) has over 700,000 members who use pretend money to buy and sell the "stocks" of movies and stars. At one point Johnny Depp was the most widely held stock. These are basically bets on how well a movie will do or how a star's career will go. HSX now sells its results to movie studios because its forecasts are more accurate than the studios' internal forecasts.

The question for Marketers today is can they harness the WOC in a productive way to delivery a unique experience that is not predicated on the development of deep and expensive content or extensive infrastructures?

RMG Connect has begun to experiment with the concept of WOC in programs for Diamond Trading Company and HSBC Bank.

For Diamond Trading Company, RMG Connect, created a site that celebrates the independence of women buying diamonds for themselves. The Diamond Right Hand Ring site (www.adiamondisforever.com) allows participants to construct statements made up of key words that express the thoughts and aspirations of the individual.

These statements contain key words such as: Determined, Celebrating, Ready, Proud, Lucky are aggregated by key cities in America and are displayed for everyone to view. For example in Kansas 7% of the respondents are Celebrating with 33% being proud. A visitor can compare each major American city and receive a quick snapshot of the key words/themes that are resonating with women in those cities.

By aggregating key emotive words/themes submitted by women from around the US by city, RMG Connect has been able to harness the concept of WOC to deliver a unique brand experience for women.

This transmission is intended solely for the person or organization to whom it is addressed and it may contain privileged and confidential information. If you are not the intended recipient you should not copy, distribute or take any action in reliance on it. If you believe you received this transmission in error, please notify the sender.

Wednesday, September 9, 2009

The internet is no respecter of reputations: innocent people have seen their lives ruined by viral clips distributed on the same World Wide Web used by activists to highlight injustices and bring down oppressive regimes Below we have compiled - in no particular order - 50 things that are in the process of being killed off by the web, from products and business models to life experiences and habits. We've also thrown in a few things that have suffered the hands of other modern networking gadgets, specifically mobile phones and GPS systems.

Do you agree with our selections? What other examples can you think of? Please post your comments on the bottom of the story – we hope include the best suggestions in a fuller list.

1) The art of polite disagreement While the inane spats of YouTube commencers may not be representative, the internet has certainly sharpened the tone of debate. The most raucous sections of the blogworld seem incapable of accepting sincerely held differences of opinion; all opponents must have "agendas". 2) Fear that you are the only person unmoved by a celebrity's death Twitter has become a clearing-house for jokes about dead famous people. Tasteless, but an antidote to the "fans in mourning" mawkishness that otherwise predominates. 3) Listening to an album all the way through The single is one of the unlikely beneficiaries of the internet – a development which can be looked at in two ways. There's no longer any need to endure eight tracks of filler for a couple of decent tunes, but will "album albums" like Radiohead's Amnesiac get the widespread hearing they deserve? 4) Sarah Palin Her train wreck interviews with NBC's Katie Couric were watched and re-watched millions of times on the internet, cementing the Republican vice-presidential candidate's reputation as a politician out of her depth. Palin's uncomfortable relationship with the web continues; she has threatened to sue bloggers who republish rumours about the state of her marriage. 5) Punctuality Before mobile phones, people actually had to keep their appointments and turn up to the pub on time. Texting friends to warn them of your tardiness five minutes before you are due to meet has become one of throwaway rudenesses of the connected age. 6) Ceefax/Teletext All sports fans of a certain age can tell you their favourite Ceefax pages (p341 for Test match scores, p312 for football transfer gossip), but the service's clunking graphics and four-paragraph articles have dated badly. ITV announced earlier this year that it was planning to pull Teletext, its version. 7) Adolescent nerves at first porn purchase The ubiquity of free, hard-core pornography on the web has put an end to one of the most dreaded rights rites of passage for teenage boys – buying dirty magazines. Why tremble in the WHSmiths queue when you can download mountains of filth for free in your bedroom? The trend also threatens the future of "porn in the woods" – the grotty pages of Razzle and Penthouse that scatter the fringes of provincial towns and villages. 8) Telephone directories You can find Fly Fishing by J R Hartley on Amazon. 9) The myth of cat intelligence The proudest household pets are now the illiterate butts of caption-based jokes. Icanhasreputashunback? 10) Watches Scrabbling around in your pocket to dig out a phone may not be as elegant as glancing at a watch, but it saves splashing out on two gadgets. 11) Music stores In a world where people don't want to pay anything for music, charging them £16.99 for 12 songs in a flimsy plastic case is no business model. 12) Letter writing/pen pals Email is quicker, cheaper and more convenient; receiving a handwritten letter from a friend has become a rare, even nostalgic, pleasure. As a result, formal valedictions like "Yours faithfully" are being replaced by "Best" and "Thanks". 13) Memory When almost any fact, no matter how obscure, can be dug up within seconds through Google and Wikipedia, there is less value attached to the "mere" storage and retrieval of knowledge. What becomes important is how you use it – the internet age rewards creativity. 14) Dead time When was the last time you spent an hour mulling the world out a window, or rereading a favourite book? The internet's draw on our attention is relentless and increasingly difficult to resist. 15) Photo albums and slide shows Facebook, Flickr and printing sites like Snapfish are how we share our photos. Earlier this year Kodak announced that it was discontinuing its Kodachrome slide film because of lack of demand. 16) Hoaxes and conspiracy theories The internet is often dismissed as awash with cranks, but it has proved far more potent at debunking conspiracy theories than perpetuating them. The excellent Snopes.com continues to deliver the final, sober, word on urban legends. 17) Watching television together On-demand television, from the iPlayer in Britain to Hulu in the US, allows relatives and colleagues to watch the same programmes at different times, undermining what had been one of the medium's most attractive cultural appeals – the shared experience. Appointment-to-view television, if it exists at all, seems confined to sport and live reality shows. 18) Authoritative reference works We still crave reliable information, but generally aren't willing to pay for it. 19) The Innovations catalogue Preposterous as its household gadgets may have been, the Innovations catalogue was always a diverting read. The magazine ceased printing in 2003, and its web presence is depressingly bland. 20) Order forms in the back pages of books Amazon's "Customers who bought this item also bought..." service seems the closest web equivalent. 21) Delayed knowledge of sporting results When was the last time you bought a newspaper to find out who won the match, rather than for comment and analysis? There's no need to fall silent for James Alexander Gordon on the way home from the game when everyone in the car has an iPhone. 22) Enforceable copyright The record companies, film studios and news agencies are fighting back, but can the floodgates ever be closed? 23) Reading telegrams at weddings Quoting from a wad of email printouts doesn't have the same magic. 24) Dogging Websites may have helped spread the word about dogging, but the internet offers a myriad of more convenient ways to organise no-strings sex with strangers. None of these involve spending the evening in lay-by near Aylesbury. 25) Aren't they dead? Aren't they gay? Wikipedia allows us to confirm or disprove almost any celebrity rumour instantly. Only at festivals with no Wi-Fi signals can the gullible be tricked into believing that David Hasselhoff has passed away. 26) Holiday news ignorance Glancing at the front pages after landing back at Heathrow used to be a thrilling experience – had anyone died? Was the government still standing? Now it takes a stern soul to resist the temptation to check the headlines at least once while you're away. 27) Knowing telephone numbers off by heart After typing the digits into your contacts book, you need never look at them again. 28) Respect for doctors and other professionals The proliferation of health websites has undermined the status of GPs, whose diagnoses are now challenged by patients armed with printouts. 29) The mystery of foreign languages Sites like Babelfish offer instant, good-enough translations of dozens of languages – but kill their beauty and rhythm. 30) Geographical knowledge With GPS systems spreading from cars to smartphones, knowing the way from A to B is a less prized skill. Just ask the London taxi drivers who spent years learning The Knowledge but are now undercut by minicabs. 31) Privacy We may attack governments for the spread of surveillance culture, but users of social media websites make more information about themselves available than Big Brother could ever hoped to obtain by covert means. 32) Chuck Norris's reputation The absurdly heroic boasts on Chuck Norris Facts may be affectionate, but will anyone take him seriously again? 33) Pencil cricket An old-fashioned schoolboy diversion swept away by the Stick Cricket behemoth 34) Mainstream media The Seattle Post-Intelligencer and Rocky Mountain News in the US have already folded, and the UK's Observer may follow. Free news and the migration of advertising to the web threaten the basic business models of almost all media organisations. 35) Concentration What with tabbing between Gmail, Twitter, Facebook and Google News, it's a wonder anyone gets their work done. A disturbing trend captured by the wonderful XKCD webcomic. 36) Mr Alifi's dignity Twenty years ago, if you were a Sudanese man who was forced to marry a goat after having sex with it, you'd take solace that news of your shame would be unlikely to spread beyond the neighbouring villages. Unfortunately for Mr Alifi, his indiscretion came in the digital age – and became one of the first viral news stories. 37) Personal reinvention How can you forge a new identity at university when your Facebook is plastered with photos of the "old" you? 38) Viktor Yanukovych The Orange Revolution in Ukraine was organised by a cabal of students and young activists who exploited the power of the web to mobilise resistance against the old regime, and sweep Viktor Yushchenko to power. 39) The insurance ring-round Their adverts may grate, but insurance comparison websites have killed one of the most tedious annual chores 40) Undiscovered artists Posting paintings to deviantART and Flickr – or poems to writebuzz – could not be easier. So now the garret-dwellers have no excuses. 41) The usefulness of reference pages at the front of diaries If anyone still digs out their diaries to check what time zone Lisbon is in, or how many litres there are to a gallon, we don't know them. 42) The nervous thrill of the reunion You've spent the past five years tracking their weight-gain on Facebook, so meeting up with your first love doesn't pack the emotional punch it once did. 43) Solitaire The original computer timewaster has been superseded by the more alluring temptations of the web. Ditto Minesweeper. 44) Trust in Nigerian businessmen and princes Some gift horses should have their mouths very closely inspected. 45) Prostitute calling cards/ kerb crawling Sex can be marketed more cheaply, safely and efficiently on the web than the street corner. 46) Staggered product/film releases Companies are becoming increasingly draconian in their anti-piracy measure, but are finally beginning to appreciate that forcing British consumers to wait six months to hand over their money is not a smart business plan. 47) Footnotes Made superfluous by the link, although Wikipedia is fighting a brave rearguard action. 48) Grand National trips to the bookmaker Having a little flutter is much more fun when you don't have to wade though a shop of drunks and ne'er-do-wells 49) Fanzines Blogs and fansites offer greater freedom and community interaction than paper fanzines, and can be read by many more people. 50) Your lunchbreak Did you leave your desk today? Or snaffle a sandwich while sending a few personal emails and checking the price of a week in Istanbul?

This transmission is intended solely for the person or organization to whom it is addressed and it may contain privileged and confidential information. If you are not the intended recipient you should not copy, distribute or take any action in reliance on it. If you believe you received this transmission in error, please notify the sender.

Tuesday, September 1, 2009

Yes, of course they are consumers but that's outside of work. In work people have a different perspective in decision making. To all but owner/ managers people aren't spending their own money and thus attack decisions in a different manner. A lot hangs on making the right decision, or at the very least, not making the wrong one. So they tend to take things quite seriously, which is why humour and light-heartedness is very rarely effective in B2B communications (as opposed to a 'wry smile' which can work). Ultimately businesses buy products or services to enhance the profitability of their company or improve on efficiencies, neither of these things sit with trying to be funny, more often than not it falls flat on its face.

Decisions therefore are often made or influenced by a group of disparate people. And with so many involved, the decision making process is longer than in consumer markets. Furthermore, these individuals within the organisation will have different objectives, for example:

Finance Director: Price, budget

Managing Director: Quality, cost effectiveness, strategic importance

Staff end user: Ease of use

If the group process plays an important role for your product or service you may want to consider developing bespoke propositions by department/ individual to maximise impact and relevance.

2. Nothing works in an instant

Consumers often buy on impulse, Businesses rarely can (with the exception of sole traders). Any communications need to highlight the benefits upfront and make it easy to digest. Multiple hits are often necessary, merely because people are so busy they need to see your brand again and again. This isn't to say we should create an intricate teaser campaign, because people just won't find the time or energy to keep up with it. A database company sent out a 5 part direct mail teaser campaign over 5 weeks – unnecessarily over complicated.

What it does mean is the most effective campaigns employ a range of media to ensure awareness is maintained, while more targeted media are used to generate business directly. Direct Mail remains the key medium to gain the most impact in B2B, but is at its most effective when used alongside phone and email as support. The length of time a decision can take is another reason why budget is often well invested in follow-ups, whether that's over the phone or by email. In both cases, enhanced personalisation will increase effectiveness. As a tool for cold prospecting, email is all but a waste of time, as cold email has quickly become the new junk (in both consumer and B2B marketing).

3. Try to do more than just "save time and money"

One issue with much B2B marketing is the uniformity of proposition. So many business propositions are based on "save the time and money with our service". While this may be the case, it's not a particularly unique proposition and lacks impact and cut through. There are two ways round this problem. The first is to revisit your product and look at the secondary benefits. There may be something that is unique, interesting, exclusive, that sets your product apart. Service and reliability are important factors to many decision makers, as is price.

If you really have no alternative to "save the time and money with our service" then you need to search for a dynamic, creative and original way to bring it to life. That might mean briefing your agency in a new and different way so that you encourage them to consider a new ways of presenting yourself.

4. Email fit for purpose

If our email work with BT has taught us anything it's that using animation and imagery isn't always the right approach in terms of boosting click through rates. It's easy to feel the need to maximise what the media has to offer (as we would in direct mail, press etc) but many results show that text only often out pulls animation. The reasons are twofold, spam filters often push emails out before the user has even seen them, and if they do reach them they are often filtered by the user as spam because of the use of imagery and animation. Each sector is different, testing is crucial here. The correct choice of subject header can make a significant different to open rates. Try and play it fairly straight and let the recipient know immediately from whom the email comes. It really is quite simple to test different subject lines to find the one that works best for you. And remember few people scroll below the fold. So ensure everything critical is on the first screen. Don't write too much. Make sure you have plenty of 'find out more' links so readers can drill down to the level of information that suits them. Unlike print media, where the call to action is commonly at the bottom (right) of the page, email response tends to come from links or buttons in the upper (left) portion. Not many people realise that.

5. Targeting our number one priority

Targeting the right individuals in an organisation has long been a B2B challenge, not only do people move companies regularly they change jobs internally even more often. Too often budget is wasted as communications are delivered to or aimed at the wrong people. Validating prospects via the phone can be costly but it is the only way to ensure list quality. Prospect pools are often smaller so it's less of a challenge from both a time and cost perspective. The better we understand individuals within an organisation the more relevant our creative message can be.

6. Build the case in business terms

Ultimately the decision making process is longer and more complex than in consumer marketing. Similarly, the end purchase decision will be more of an investment than any consumer purchase. In the majority of cases our target individual(s) will have to sell your story on to many internal contacts so providing clear proof to satisfy the different needs of their audience is crucial. We can help them do this by building the business case for your product or service. Provide them with the facts, figures, statistics and research to support our case. For example, we can help them:

Cut costs by X%

Increase efficiency by Y%

24 hour, 364 days a year service

Most businesses focus on FIVE key business issues. These are; winning new customers; servicing existing customers; managing change; handling suppliers and reducing costs. We ought to see how our brand, product or service addresses or provides solutions to these issues individually. That may help us find appropriate propositions, and suggest changes in propositions we may want to make according to our target. It will certainly help your prospect understand the role your product has to play in his business.

7. Building long term strategies

We often write 3-5 year marketing plans for consumer brands, but these seem far rarer in B2B marketing. Arguably the marketing and business landscape changes quicker in B2B but that doesn't mean we shouldn't apply good marketing practice and build long term (yet flexible) plans. Where do we want the business to go in 3 years? What will the competitive landscape look like? Will our audience change? How can we stay ahead of the competition? How is the organisation changing? There are more complexities and variables in B2B marketing which point to building solid plans, but too few do it in marketing terms.

8. Dramatize your point (relevantly)

All too often B2B communications fall in to the truly unforgettable 'letter and a leaflet' bin or are instantly deleted ad 'blanket non targeted email'. Not only are these missed opportunities to raised awareness of your brand, they are a less than satisfactory device for even the finest sales consultant to follow up on. Memorability and impact are critical to success, particularly in cold lead generation. Any campaign has a far higher chance of success if the follow-up sales call can be based upon a piece of work that the recipient actually recalls. Even if they do not remember all the salient points, it doesn't matter, at least it initiates a conversation that the person on the phone can lead. With all work we do, be it on or offline, B2B or consumer we try to dramatise our point, rather than simply say it. Never is this more important than in B2B, where your audience won't give your brand more than a cursory glance, especially if there is no personal gain in it. Captivating people whilst at their place of work is one of DM's hardest challenges, but it's not to say it's impossible.

This isn't licence to send nonsensical and irrelevant devices to be seen (paper aeroplanes, complex cardboard engineering) but it is licence to dramatise the benefit of what you are selling in a relevant manner. A recent campaign for Scottish Widows Investments focused on the age and experience of our bond team, we dramatised this point by sending Pension Fun Managers a 15 year old bottle of malt alongside information on new products and the team. The mailing was responsible for generating a lead that went on to generate over £50m worth of income.

9. Make response easy

We need to make it as easy as possible for people to respond, and delivering multiple response channels at least reminds them they are expected to respond to. This could mean employing a combination of coupon, phone, email, web, even sms. And the ease of responding, or difficulty, WILL affect the response you achieve. And take the customer journey yourself. Imagine you are responding to your own campaign and see how easy it is. For instance, if you're featuring you url on the communication will the customer know what to do when they land? Is there a link between your marketing campaign and the home page? For instance, if the call to action on the marketing says "Find out how we could save your business money" then there should be a button on the landing page that tells them that. Even these days a coupon or order form will always uplift a press ad or mail pack even if all the response comes back through the phone or via the url. Your audience are unlikely to be spending a great deal of time on what you've sent so ease of response is all the more important. We should be following all communications up anyway, within 2 weeks maximum of the first element reaching the target – any further lag and we're in danger of being forgotten – if we've not been already.

10. Build the brand

Not many advertising agencies would agree but direct marketing has often done a brand job, and no more so in B2B marketing where perhaps your brand doesn't have the enormous budgets for TV or Outdoor advertising. Direct Mail especially can deliver brand messages and raise awareness, something we achieved very successfully with Scottish Widows Investments. Relatively small in Investment Banking circles, and with a sales process that didn't allow direct selling to Pension Fund Managers we could only present the brand (and products) to this audience. They had to come to us, so a constant presence through mail, email and phone kept us front of mind throughout the year. Think about using email differently. Rather than always using it to overtly 'sell', why not use it to build the brand? You can simply produce something that simply says, "Dear So-and-so, I thought you might be interested in reading this…" And you provide a link to (or embed) a relevant piece of research about their industry sector. Consider also the role that your website plays. Does it just tell the story of your brand or does it actually provide information that might help customers in their business? You may be surprised at how much of this information and research you actually have 'lying around' the office. It might just need a little repackaging and then you have a really powerful brand building tool.